Crypto

Crypto Swindler Sam Bankman-Fried Has Scored a Big Win From Behind Bars

Published

2 years ago

January 3, 2024

Crypto Swindler Sam Bankman-Fried Has Scored a Big Win From Behind Bars

The cryptocurrency industry landed one of its most desired prizes last month when regulators at a small but potentially pivotal federal agency allowed a little-known cryptocurrency company to oversee all aspects of brokering, facilitating, and clearing trades of its digital assets.

Regulators and experts say the move, which came after millions were spent in lobbying in 2023 alone, could endanger customer assets and stifle competition, as well as set a dangerous precedent that could set up this and other financial markets for spectacular collapse.

The December 13 approval of the application from Bitnomial, a small Chicago-based crypto derivatives company, is the first time the Commodity Futures Trading Commission (CFTC) has approved any financial institution to vertically integrate as an exchange, broker, and clearinghouse, without doing so through company acquisitions.

In most financial markets, the responsibilities for different functions are handled by separate entities to prevent conflicts of interest and ensure market stability. One entity runs the exchange where financial instruments are traded; another is a broker which performs transactions on behalf of clients; and another clears, or validates, the transactions before they go through.

The approval of Bitnomial’s application comes after years of cryptocurrency interests — most prominently, convicted financial fraudster Sam Bankman-Fried — cozying up to CFTC regulators and pushing to ensure all federal crypto regulations are handled by the commission. The CFTC’s limited size and funding could lead to laxer oversight, compared to regulations from the much more aggressive and powerful Securities and Exchange Commission (SEC).

Now, with the Bitnomial approval, experts told the Lever that a precedent has been set that could allow more companies under CFTC oversight to vertically integrate into massive financial firms that could be susceptible to collapse.

“It’s a pretty big deal that’s flying under the radar, and it came up as a surprise at year end,” Dennis Kelleher, president and CEO of consumer advocacy group Better Markets, told the Lever. “Although it’s no surprise that the crypto-friendly CFTC chairman Rostin Behnam would do this without much advance notice — ramming something through that’s crypto friendly at year end, that’s not a surprise.”

One CFTC commissioner who voted against the approval criticized her colleagues for rushing through the five-member commission’s first-ever vertical integration approval.

“We are in the middle of a public consultation on vertical integration and concerns with vertical integration have been expressed by the White House . . . Treasury Secretary Janet Yellen and other banking regulators,” said CFTC commissioner Christy Goldsmith Romero in a December 13 press release. “I do not understand why the Commission would rush to register this small start-up company, thereby setting precedent, without completing the analysis that we are in the middle of right now.”

Bitnomial says it did not pursue its application to “create a vertically integrated entity,” and that it still plans on working with multiple brokers. Bitnomial also claims its application did not receive an expedited process.

“The application wasn’t rushed,” a Bitnomial spokesperson told the Lever. “As was pointed out by CFTC staff in the public meeting, the application was first recommended for approval in early 2023 and the commission contemplated it so long that their statutory [180-day] deadline lapsed, at which point Bitnomial agreed to extend the deadline. Bitnomial is seeking this approval to expand digital asset support and access given how nascent the regulated digital asset derivatives market is in the US”

The CFTC, which was originally established in 1974 to oversee agricultural futures contracts, has been called the “Achilles Heel” of the 2010 Dodd-Frank Act because it was handed oversight of the massive US derivatives market, including all financial options, swaps, and futures, after the 2008 financial crisis.

In 2022, the CFTC had an operating budget of just $332 million and 743 full-time employees, compared to the SEC, which oversees the stocks and bonds markets and had a 2022 budget of nearly $2 billion dollars and more than forty-five hundred full-time employees.

The crypto industry has worked diligently over the years to make the CFTC the sole regulator of digital assets. It’s why the fight over the definition of cryptocurrencies has become heated; some regulators view it as a security, similar to a stock or bond, which would likely bring it under the purview of the SEC, while others view it as a commodity, like grain or oil, which would place its regulation under the CFTC.

The CFTC has developed a congenial relationship with the crypto industry — and in particular Bankman-Fried, the disgraced former CEO of the massive crypto exchange FTX, which collapsed in November 2022. Bankman-Fried played a pivotal role in glorifying crypto and lobbied the CFTC before he was arrested and ultimately found guilty on seven counts of felony fraud and money laundering in November. His sentencing hearing is scheduled for March 28, where he faces more than a hundred years in prison.

Before his criminal activity was discovered, Bankman-Fried and his associates were able to obtain same-day meetings with CFTC chair Behnam, thanks to the connections and efforts of former CFTC regulators that FTX hired as top deputies.

Behnam, a former equities trader and congressional advisor, was appointed to the CFTC in 2017 by former president Donald Trump. He was reappointed to the position in 2021 by President Joe Biden and elected chair by his co-commissioners.

Bitnomial’s application is similar to one that Bankman-Fried was pursuing for FTX, which was to allow the company to consolidate the exchange, broker and clearinghouse functions for the digital assets it managed. The FTX application sought to change how derivatives markets and clearinghouses operate; the Bitnomial application was less ambitious, Kelleher said.

“[Bitnomial’s approval] not only allows crypto firms to get bigger, but it positions them to get connected to the core of the financial system, where when they get in trouble, like dominoes, they could have knock-on effects on the traditional banking and financial system, which could lead to crashes and bailouts,” Kelleher said.

Bitnomial, founded in 2014, is a relatively small company with just $1.7 million in total assets, and its application was not given a public comment period, like the one FTX underwent, when it submitted its application in April 2022.

Instead, in June 2023, the CFTC issued a Request for Comment for an obscure process, called “Impact of Affiliations of Certain CFTC Registered Entities,” to consider the potential issues that may arise from vertical integration under CFTC regulation. The CFTC received over 160 comments during this process, many of which warned of the potential risks associated with vertically integrated financial institutions.

“The CFTC should have put the Bitnomial application out for public comment and it should have taken that information and the information submitted in response to the ‘Impact of Affiliations of Certain CFTC Registered Entities’ all into account before it took action . . . and allowed the dangerous affiliations presented in the Bitnomial application,” Kelleher said.

CFTC commissioner Goldsmith Romero expressed similar concerns.

“We received so many comments expressing serious concerns about conflicts of interest risk, risk of customer harm, anti-competitive risks, contagion risk, financial stability risks, and systemic risk,” she said in her December 13 press release. “That means the stakes are high if we get this wrong.”

Steven Adamske, a senior spokesperson for the CFTC, declined to comment on Commissioner Goldsmith Romero’s comments suggesting the application was rushed through.

“The Bitnomial Application has been with the commission for over a year where we have a statutory deadline to act within a certain period of time,” he said. “I would point out, however, that the application has been under consideration for over a year and that in Commissioner Goldsmith Romero’s December 18 statement, she notes she was prepared to vote against the application in May.”

He also noted the Commodity Exchange Act and the Commission’s own recommendations do not require a public comment period for the type of application Bitnomial submitted.

Although the company is small, Bitnomial has deep-pocketed investors, including investment firm Franklin Templeton and crypto exchange Coinbase. Both companies have spent more than $3.7 million combined lobbying Congress, the CFTC, the White House, and other federal entities on crypto and additional issues in 2023 alone, disclosures show.

Kelleher, the president of Better Markets, said Bitnomial’s application would never have been approved by the SEC because securities law prevents this type of consolidation. He added that the consolidation is similar to the market structure that was allowed right before the stock market crash of 1929, preceding the Great Depression.

Kelleher added that it was this structure — one entity acting as an exchange, broker, and clearinghouse — that also caused the collapse of FTX, even though the arrangement was illegal to do so at the time.

“They were technically separate entities, but they had common control, which was Sam Bankman-Fried,” Kelleher said. “It illustrates that when you have those conflicts of interest, the pressure to advantage different parts of your business for your own benefit and at the expense of others like investors and customers is overwhelming. And that’s effectively what the CFTC is approving here.”

CFTC commissioner Kristin N. Johnson also warned about the dangers of vertically integrated financial companies, but ultimately voted for the Bitnomial application after she said Bitnomial promised to put consumer protections in place to prevent conflicts of interest.

In a press release explaining his support of Bitnomial’s application, CFTC chair Behnam made no mention of the possible dangers of vertical integration and praised Bitnomial for incorporating changes regarding concerns that arose from the public comments they received.

“Bitnomial has demonstrated compliance . . . [and] this demonstration of compliance is all that is required for registration,” Behnam said in a press release. “Bitnomial has also adopted rules that specifically address potential conflicts of interest associated with having [a vertically integrated company] and a separate, stand-alone policy that addresses potential affiliate conflicts.”

Behnam also said vertically integrated clearinghouses “are not novel structures,” that Bitnomial’s application was standard, and that the Commission should not hold them to a higher standard, “ nor should it require compliance with rules that have not yet been proposed or approved,” Behnam said in a December 18 press release.

But for consumer advocates like Kelleher, the CFTC’s approval of this model represents a “big Christmas present at year end” for the industry.

“I think the bottom line of this crypto application approval is that the action really shows, again, what a weak crypto regulator the CFTC is,” Kelleher said. “And how ill-suited it is to properly regulate a largely lawless financial market like crypto.”

Crypto

Solana Foundation Launches STRIDE Security Program for DeFi Protocols Following Drift Incident

Published

7 hours ago

April 6, 2026

Press Room

Solana Foundation Launches STRIDE Security Program for DeFi Protocols Following Drift Incident

Key Takeaways:

The Solana Foundation and Asymmetric Research launched STRIDE on April 6, 2026, a tiered DeFi security program covering all protocols.
Protocols exceeding $10M TVL qualify for foundation-funded 24/7 monitoring, while those above $100M TVL receive formal verification.
The new Solana Incident Response Network (SIRN) unites five founding firms, including OtterSec and Neodyme, for real-time crisis coordination.

Solana Foundation Debuts STRIDE to Protect DeFi Protocols With Tiered Security

The program, which stands for Solana Trust, Resilience and Infrastructure for DeFi Enterprises, moves away from the traditional model of one-off audits and replaces it with continuous, foundation-funded protection scaled to each protocol’s size and risk profile.

STRIDE is structured around eight security pillars covering operational security, access controls, multisig configurations, and governance vulnerabilities. Asymmetric Research conducts hands-on assessments of participating protocols and publishes findings in a public repository, giving users and investors direct visibility into each protocol’s security standing.

All Solana DeFi protocols are eligible to apply. Every participating project receives an independent evaluation and a published report regardless of size.

Image source: X on April 6, 2026.

The announcement explains that protocols that pass the STRIDE evaluation and hold more than $10 million in total value locked (TVL) qualify for foundation-funded 24/7 operational security support and real-time threat monitoring. The monitoring is calibrated to risk, meaning higher-value protocols receive more intensive coverage aimed at catching suspicious activity before it escalates.

For the largest protocols, those managing more than $100 million in TVL, the Solana Foundation funds formal verification. This method uses mathematical proofs to check every possible execution path in a smart contract, eliminating entire classes of vulnerabilities that standard audits can miss.

STRIDE version 0.1 is live now and is expected to evolve as real-world assessments provide feedback.

Alongside STRIDE, the foundation launched the Solana Incident Response Network, known as SIRN, a coalition of security firms dedicated to real-time crisis response across the ecosystem. Founding members include Asymmetric Research, OtterSec, Neodyme, Squads, and Zeroshadow. SIRN is open to all Solana protocols, with response prioritized by TVL and potential impact.

The program builds on existing no-cost tools the Solana Foundation has already deployed, including Hypernative for ecosystem-wide threat detection, Range Security for real-time risk alerting, Riverguard by Neodyme for attack simulation, Sec3 X-Ray for static analysis, and Auditware Radar for template-based issue detection.

Drift Protocol Hack 2026: What Happened, Who Lost Money, and What’s Next

A Solana-based perpetual futures exchange lost $286 million in 12 minutes on April 1, 2026, after attackers spent three weeks…

Read Now

Drift Protocol Hack 2026: What Happened, Who Lost Money, and What’s Next

A Solana-based perpetual futures exchange lost $286 million in 12 minutes on April 1, 2026, after attackers spent three weeks…

Read Now

Drift Protocol Hack 2026: What Happened, Who Lost Money, and What’s Next

Read Now

A Solana-based perpetual futures exchange lost $286 million in 12 minutes on April 1, 2026, after attackers spent three weeks…

Projects like Squads Multisig, Kamino, and Jupiter Lend have already set high internal security standards, with ten or more audits across some protocols. STRIDE is designed to extend comparable protections to teams that lack the resources to fund that level of coverage independently.

The Solana Foundation also participates in the Crypto Defenders Alliance for cross-industry fraud prevention, and STRIDE adds a Solana-specific layer on top of those broader efforts. The initiative follows the recent $286 million Drift Protocol hack, which was the largest DeFi breach so far in 2026.

Drift Protocol is the largest perpetuals exchange on Solana and it saw its TVL slide from $550 million to the current $234 million. The project’s token, DRIFT, as of 6:30 p.m. Eastern time on Monday, is down more than 37% over the last seven days. DRIFT is 98.5% below the crypto asset’s all-time high of $2.60 logged in November 2024.

Crypto

Cryptocurrency analytics company Santiment announces that Bitcoin network profitability is at its peak! Here are the details

Published

19 hours ago

April 6, 2026

Press Room

Cryptocurrency analytics company Santiment announces that Bitcoin network profitability is at its peak! Here are the details

Cryptocurrency analytics company Santiment shared some noteworthy data regarding profitability on the Bitcoin network.

According to the company’s latest report, the ratio of profitable to losing Bitcoin trades rose to 2.95 to 1 last weekend.

This metric is calculated based on the difference between the price of a Bitcoin at the time of transfer and the price at which it was purchased. This ratio reveals the extent to which investors are profitable under current market conditions, while also offering important clues about market sentiment.

According to Santiment data, this ratio historically approaching the 3.0 level is generally considered a signal indicating a short-term price peak. Analysts point out that during such periods when a large portion of investors are in profit, selling pressure may increase, which could have a downward impact on the price.

Market experts emphasize that this data alone should not be seen as a definitive bearish signal, and that evaluating it in conjunction with other technical and on-chain indicators will yield healthier results. However, it is stated that the current ratio level indicates that investors should exercise caution.

While Bitcoin’s price has shown strong performance recently, investors’ tendency to take profits could be decisive in determining the market’s direction. According to experts, changes in on-chain data and transaction volume in the coming days will provide a clearer picture of price movements.

*This is not investment advice.

Crypto

This Week in Crypto Law (Mar. 29, 2026)

Published

1 day ago

April 5, 2026

Press Room

This Week in Crypto Law

The opinion editorial below was written by Alex Forehand and Michael Handelsman for Kelman.Law.

The final week of March delivered a series of pivotal legal and regulatory developments bridging traditional finance and digital assets. From tokenized securities trading in the United States to global enforcement actions and jurisdictional battles, regulators are increasingly asserting control while also enabling new market structures

SEC Approves Nasdaq Plan for Tokenized Securities Trading

The U.S. Securities and Exchange Commission approved a proposal by Nasdaq to facilitate trading of certain equities and ETFs in tokenized form. This move represents a significant step toward integrating blockchain infrastructure into traditional securities markets, allowing tokenized representations of assets to trade alongside conventional instruments. The approval signals growing regulatory acceptance of blockchain-based settlement systems and could accelerate adoption of tokenization across mainstream financial markets.

Hong Kong Tightens Crypto Licensing Regime

Hong Kong has intensified its crypto licensing requirements, warning exchanges that failure to obtain proper authorization could result in enforcement action as the transition period ends. The shift reflects a broader regulatory evolution—from early-stage openness to strict compliance enforcement. While some firms may exit the market, others may view this as a necessary step toward institutional credibility and long-term adoption.

Nigeria Charges Binance Executives with Tax Evasion

Nigeria has filed tax evasion charges against executives of Binance, escalating its efforts to regulate crypto activity within its borders. The case presents a major test of how far national governments can extend jurisdiction over global crypto platforms and their personnel, particularly in emerging markets.

Scrutiny Mounts After SEC Enforcement Chief Resigns

U.S. lawmakers are seeking answers following the abrupt resignation of the U.S. Securities and Exchange Commission’s enforcement director. The departure has raised concerns about potential political influence over enforcement priorities, including those related to crypto markets. Leadership changes at key regulatory agencies can significantly impact enforcement strategy, creating uncertainty for market participants navigating compliance obligations.

Department of Labor Opens Door to Crypto in 401(k) Plans

The U.S. Department of Labor proposed new guidance that could allow crypto assets to be included in 401(k) retirement plans. The proposal would permit plan fiduciaries to allocate to crypto alongside other alternative investments, such as private equity. This marks a potential turning point for mainstream adoption—but also raises complex legal questions regarding fiduciary duties, risk disclosures, and investor protection in retirement accounts.

U.S. Government Challenges State Regulation of Prediction Markets

The U.S. government has filed lawsuits against multiple states, asserting that only the Commodity Futures Trading Commission has authority to regulate prediction markets. The dispute centers on whether event-based trading platforms should be regulated as gambling under state law or as derivatives under federal law. This is a critical jurisdictional battle that could determine how emerging digital trading platforms—such as prediction markets—are regulated in the United States.

Staying informed and compliant in this evolving landscape is more critical than ever. Whether you are an investor, entrepreneur, or business involved in cryptocurrency, our team is here to help. We provide the legal counsel needed to navigate these exciting developments. If you believe we can assist, schedule a consultation here.